Automation, AI and other advances are speeding the transformation of U.S. fixed-income markets by breaking down innovation barriers and forcing buy-side firms to invest in technology to keep up.
“The bad news is that fixed income is 10 to 20 years behind other markets when it comes to technology,” says Audrey Costabile, Senior Analyst for Coalition Greenwich Market Structure & Technology and author of Fixed-Income Trading Technology: On the Verge of Change. “The good news is that we appear to be on the verge of major change.”
The dated nature of fixed-income technology platforms is causing headaches, and buy-side fixed-income traders participating in a recent study by Coalition Greenwich in partnership with FlexTrade have expressed concerns about stack fragmentation and system interoperability, manual errors and processes, and data access.
Traders who are frustrated with these problems are asking for platform upgrades that provide enhanced connectivity to venues and counterparties alongside an aggregated view of market data.
Despite limited adoption today, more than 50% of the buy-side traders participating in the study say they have plans to adopt an EMS for investment-grade corporate bonds and on-the-run Treasuries, and nearly half expect to be using an EMS for high yield and off-the-run Treasuries.
“Given the growing need for rapid progress in data management and market connectivity, investments in trading desk technology will increase,” says Audrey Costabile. “This is not a vision of some distant future, as our research shows more adoption and use in the next 12 months.”
Fixed-Income Trading Technology: On the Verge of Change presents a detailed breakdown of the current state of the fixed-income technology infrastructure, an examination of the most important technologies now being developed and adopted, and analysis of how and how fast those innovations are transforming the fixed-income market structure.
Source: Coalition Greenwich
